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Thoroughbred Idea Foundation: Casinos Are Evolving, Racing Is Not

As the winner of last week's Pennsylvania Nursery returned to Parx's weather-protected winter “winner's circle” – a side of the track's covered paddock – a banner was easily noticeable taking up key space in the frame of the track's broadcast feed.

“Online Casino – Now Live”

Adjacent to that, though covered to some degree by the winning connections, was another banner touting the Parx mobile app for sports betting.

Here was the casino side of the business marketing quite obviously to anyone who happens to be watching racing, a certainly less productive side of the Parx business.

It's more than just marketing – it is a sign of a business that is evolving.

Parx, and other Pennsylvania racetracks, have housed slot machines since they were legalized by the state's legislature in 2005. Table games followed, with poker. And sports betting. And fantasy sports. And video gaming terminals (basically, machines at truck stops in rural Pennsylvania). And most recently, something called “interactive gaming.”

Interactive gaming is the so-called “online casino” – slots and table games with real money wagering on mobile devices – being advertised in the Parx winner's circle. After more than a decade of just traditional land-based casinos, Pennsylvania took legal gambling to the mobile device space, into your hand, anywhere within the well-populated state.

As it relates to racing, the sport receives purse supplements from land-based slots only, nothing from any of the other non-racing wagering platforms, which notably includes interactive gaming.

In February, before the pandemic-related closures hit state casinos, the total from all slot machine play in the state's casinos was $2.499 billion, with $20.2 million designated to the Pennsylvania Race Horse Development Fund (PRHDF). Interactive (mobile) slots play, from all sources in the state, totaled $254 million, equating to just 10 percent of all land-based slot play.

By October, interactive slots handled $1.114 billion, up more than four times the handle from eight months earlier, while land-based play had dropped to $1.937 billion, down 22 percent, while the total cut to the PRHDF dropped to $15.9 million, a 21 percent fall.

In total, slots play in Pennsylvania, via land-based machines or interactive play, grew from $2.753 billion in February to $3.051 billion in October, up nearly 11 percent.

This has been bad news for racing, in that not only has land-based play declined, directly impacting the size of contributions to purses from slots, but customers have flocked to mobile play in droves. Land-based casinos are shuttered until after New Year's Day, potentially helping the interactive push even more.

While it is possible post-pandemic mobile play will decline sharply, betting against mobile play seems an odd choice considering the way our lives are impacted by mobile technology and its simplicity. Give customers several months to acclimatize to the comfort of mobile slots play, and they might be gone from land-based play for good.

As troubling as this is for Pennsylvania racing purses, the key point is that Parx has greatly developed their gambling options and technology over time. The market evolved and Parx Casino evolved with it.

What about racing?

The evolution of racing's wagering product over the same period has been negligible. Those who benefit directly from wagering – horsemen – have accomplished little in terms of convincing management to focus on improving or modernizing racing's wagering product.

Pennsylvania accounted for 10 percent of all Thoroughbred races run in America in 2019. For 2021, the state's racing commission has awarded 20 percent fewer race days than 2020, though the number of races may not fall that dramatically. Regardless, the question should be how Thoroughbred racing can evolve wagering, most notably in light of this incredibly competitive wagering marketplace.

Pennsylvania is hardly alone in this battle.

Racing in Delaware and West Virginia, both which share borders with Pennsylvania, are in similar straits: highly evolved and competitive betting markets, both with online play permitted, racing purses benefit exclusively from land-based play, all while their racing wagering products have generally withered.

Maryland has yet to embrace interactive wagering, but it will surely do so at some point in the future, a move which could hamstring horsemen, who are on the hook for more than $140 million in debt repayments which is to come from their share of land-based video lottery terminal revenue, should the tracks redevelopment plan there take off.

New Jersey, however, has not shared revenue from the state's casinos with horsemen…ever. The horsemen have had to get more creative, leading the multi-year lawsuit which successfully enabled the widespread legalization of sports betting, and are plotting steps to serve greater American racing as a test case to evolve fixed odds wagering on racing.

New Jersey racing has also been directly subsidized by the state, a subsidy which was cut 25 percent for 2021.

The “industry” has ignored the sport's wagering future for decades. If it does not evolve and modernize, the business will shrivel. It has to change in order to have a hope of succeeding. The livelihoods of tens of thousands of dedicated horsemen hang in the balance as time passes. The representatives of those horsemen must pursue aggressive modernization of wagering to remain competitive.

Horsemen don't often see their role as one of being an advocate for wagering advances, but as the casino business modernizes away, the horsemen have little choice but to get involved…finally.

The post Thoroughbred Idea Foundation: Casinos Are Evolving, Racing Is Not appeared first on Horse Racing News | Paulick Report.

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TIF: Federal Bill Funding Cannot Come From Horseplayers

by Thoroughbred Idea Foundation

Editor’s note: The following open letter to the industry was submitted by the Thoroughbred Idea Foundation, a think tank and advocacy group which aims to improve the sport of Thoroughbred racing for all stakeholders.

The passage of the Horseracing Integrity and Safety Act (HISA) would signal a prominent turning point for Thoroughbred racing in America.

Regardless of where one has stood on the merits of the legislation over the years, its passage will bring to an end a generation of discord between industry participants, enabling our greater industry the opportunity to focus on long-ignored advancements to better secure the sustainability of horse racing.

At its heart, racing exists because of horse owners and breeders investing in Thoroughbreds and horseplayers wagering on them. Policies which hinder participation, of horseplayers or through ownership, stunt industry growth, and are in opposition to the mission of the Thoroughbred Idea Foundation, which seeks to grow participation through these two key groups. We want racing’s overall “pie” to grow, but without horse owners and horseplayers voluntarily choosing to participate in the sport, racing would be would be a shell of itself.

The HISA will yield a federally recognized organization to facilitate doping control within the sport while bringing more constituencies under the regulatory fold. Upon its passage, substantial planning and execution will still be required, including identifying the funding mechanism for individual states’ participation in HISA-created programs. The path forward to paying for these programs remains unclear.

In some states, wagering is a main source of funding for racing commissions to regulate the sport. Should HISA programs increase costs to states–a reasonable expectation–it is possible they, in concert with other stakeholder groups, could turn to wagering channels to increase revenues.

This would be a gross miscalculation.

While HISA has earned support because of the undoubted need for racing to be proactive in maintaining its social license to operate, the programs associated with the bill should not be built on the backs of horseplayers.

The Thoroughbred Idea Foundation advocates for sound policies which encourage wagering, racing’s most sustainable source of funding. These policies include reducing bet pricing, modernizing wagering technology and integrity measures, increased transparency and reporting standards as well as introducing fixed-odds betting to complement pari-mutuel wagering.

Increasing costs to horseplayers is a counterproductive measure for the industry, and thus, any increases in bet pricing to pay for the programs associated with the HISA should be a non-starter.

The post TIF: Federal Bill Funding Cannot Come From Horseplayers appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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TIF: There’s Still Time To Make Handle A Top Priority For Racing

Racing needs a long-term plan which will put the sport on a path to raise handle to nearly $50 billion annually with more than $5 billion held by the industry by 2040.

Sound optimistic?

Falling well short of that goal would still be a monumental accomplishment given we are on track for another year at just $11 billion in handle, and down nearly 50% in the last two decades, adjusted for inflation.

So where are the plans from the industry to start thinking long-term about not just surviving, but thriving, and building a robust, wagering-forward industry?

Horse racing has a tremendous opportunity to lean into a massive culture of betting liberalization, but it has otherwise failed to capitalize on it. Time is still there, and the opportunity is not yet lost.

There is no doubt horsemen should be thankful for the enrichment they've received through purses over the last two decades coming by way of slot machines, video lottery terminals, historical horse racing or other revenue sharing from casino-related operations. In many cases, tracks and horsemen lobbied relentlessly for them. It makes sense that they continue to fight for them, but not at the expense of racing's most obvious source of sustainable revenue – actual wagering on racing.

These significant purse supplements have allowed the industry to minimize the importance of presenting a modern wagering product. Most tracks have not focused on making racing wagering more competitive and most horsemen's groups have not advocated for meaningful improvements to stoke wagering, either.

In some cases, 90% of prize money has come from subsidized sources beyond racing, wagering on the sport has not seemed as important – a reality which is reflected in annual handle figures over the last 20 years. Many owners and trainers within horsemen's groups do not possess a detailed understanding of racing wagering. They don't know what to advocate for to improve their own futures.

This is problematic, because as it relates to prize money for racing, the future is not bright.

Subsidies to racing from gambling beyond racing, in whatever form they take in states that have long enjoyed them, are changing. Some states are in worse shape than others. The pain of the industry's likely contraction will be widespread.

Horsemen cannot just want a bigger slice of a shrinking pie, it must advocate for growing the pie so that the slices grow for all parties.

Existing groups – including TOBA, state THAs, HBPAs and others – must begin to develop a meaningful strategic plan. Transformational steps to ensure the best possible future for racing must be embraced. At the forefront, a radical rehabilitation of wagering on racing is needed. No ideas should be off the table.

The sport is in no position to turn away from unexplored revenue streams or customer bases. Fixed odds betting on American racing is evolving, albeit slowly, and while there is no denying that the cut from fixed odds betting to tracks and purses is smaller than that provided by pari-mutuel wagering, ignoring the fastest growing legal wagering opportunity in modern American history cannot be an option. Racing's path through fixed odds must be navigated delicately and adjusted over time, but racing needs to be co-located with all other wagering opportunities.

Racing can make its pari-mutuel offerings better and get its wagering product in front of far more customers. The question, of course for all of this, is in the specifics. How?

The sport needs short, intermediate and long-term strategic planning, identifying and plotting courses to achieve goals over the next 10, 20 and 30 years.

Racing had no such plan in 1990 when annual wagering was an inflation-adjusted $18 billion and a decade later, topped $21 billion, also when adjusted for inflation. But what has happened in the intervening two decades is a mass legalization of wagering opportunities combined with significant technological innovations and a substantial increase in personal entertainment options. Racing has to compete if we are to preserve our sport, let alone grow it.

Where are the attempts to voraciously advocate for a most robust wagering offering for our sport which will likely rely far more on it in the next 20 years than it has in the past 20 years?

Just because we lack a centralized structure to oversee an industry master plan does not mean that those groups which exist now are hamstrung from starting one. Owners, breeders and all horsemen should be as interested in growing wagering as anything else they do. Many don't have the first clue where to start, and while unfortunate, it's understandable. There should be no further delays in correcting our course.

The Thoroughbred Idea Foundation was launched to advocate for progressive change in racing because we believe it is possible to turn the sport around.

With a concerted effort, racing could double handle in the next ten years, and double it again in another decade, but only if changes are adopted which would offer more realistic pricing of pari-mutuel wagers, complement tote wagering with fixed odds betting, modernize technology, improve access to data and substantially increase transparency across the sport.

Racing must be more open in reporting on the business of betting – where it is coming from, what it contributes to purses and how it has changed over time. This movement should be driven by owners. Racetracks have proven insufficient leaders of the sport and industry organizations have been distracted by other topics. Nothing should be more top of mind than how we fund our business and keep racing viable.

Racing needs a new generation of horsemen's leadership to propel it forward. Those who might not think it is the role of horsemen to relentlessly pursue improving the wagering business should think again – their role is federally protected by the Interstate Horseracing Act and should be the envy of any professional sporting endeavor in the country. Racing needs increased wagering to survive, let alone thrive.

The business of betting has been ignored for far too long. A new future for the sport promotes a modern wagering business at the heart of racing.

The post TIF: There’s Still Time To Make Handle A Top Priority For Racing appeared first on Horse Racing News | Paulick Report.

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Wagering: American Racing’s Top Priority Going Forward

Courtesy Thoroughbred Idea Foundation

Racing needs a long-term plan which will put the sport on a path to raise handle to nearly $50 billion annually with more than $5 billion held by the industry by 2040.

Sound optimistic?

So where are the plans from the industry to start thinking long-term about not just surviving, but thriving, and building a robust, wagering-forward industry?

There is no doubt horsemen should be thankful for the enrichment they’ve received through purses over the last two decades coming by way of slot machines, video lottery terminals, historical horse racing or other revenue sharing from casino-related operations. In many cases, tracks and horsemen lobbied relentlessly for them. It makes sense that they continue to fight for them, but not at the expense of racing’s most obvious source of sustainable revenue–actual wagering on racing.

These significant purse supplements have allowed the industry to minimize the importance of presenting a modern wagering product. Most tracks have not focused on making racing wagering more competitive and most horsemen’s groups have not advocated for meaningful improvements to stoke wagering, either.

In some cases, 90% of prize money has come from subsidized sources beyond racing, wagering on the sport has not seemed as important–a reality which is reflected in annual handle figures over the last 20 years. Many owners and trainers within horsemen’s groups do not possess a detailed understanding of racing wagering. They don’t know what to advocate for to improve their own futures.

This is problematic, because as it relates to prize money for racing, the future is not bright.

Click here to read the rest of the essay.

The post Wagering: American Racing’s Top Priority Going Forward appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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